Drew Edmundson wrote:

- quote -

I would have to check, but my quick recollection is that
when you have the drop in use, you have to recompute on the
*straight line* method, and that if forced to use the
straight line method for that reason you do not qualify for
the 50% first year bonus.

Check §168(k) and the IRS regulations there and I think
you'll find the above is correct.

--
Ed Zollars, CPA
Phoenix, Arizona

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Ed Zollars, CPA" <ezollar[at]mindspring.com> wrote:
- quote -

Would he have to recompute using the 50% first year
depreciation (assuming it is a new vehicle)? If so he might
have a gain. This is not something I have had to face yet.

Drew Edmundson, CPA (NC)
e-mail is my first name at nccpa dot com

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I too am in a similar situation, I have a home-based
computer consulting S-Corp, but I do travel (commute?)
regularly to my one client. So far, only one client, and I
am the sole employee of my company. Thinking of buying
6000+ SUV with all cash upfront, no financing. I guess if I
do decide in the future years to shut down and take a
full-time job, I could sell the SUV right? What the tax
implications of that?

Also, my biggest worry is the fact that I have only one
client and I do go their location regularly. Any thoughts?

BTW, I do have an accountant, I just want to be better
informed before I pepper him with questions.

Thanks
lzk

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Dan Perlman wrote:
- quote -

Watch out for the RECAPTURE if you don't get the "5-year"
life out of the vehicle (over 6 years since first and last
only count for half each)....

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Paul wrote:
- quote -

No expense? The business portion of the INTEREST which is
part of that payment will still be deductible. [Granted,
many auto dealers are currently offering 0%, but that
doesn't in itself change what the law permits.....] IRC 179
only takes care of the PRINCIPAL of the payments.

Also, since no one has mentioned this: If there is
insufficient profit (w/o regard to any 179 deduction) to
offset the entire amount expensed, one can still elect the
option - but the excess will be carried to the next year.
Don't forget that wages are an allowable income offset even
for a schedule C activity for 179 purposes.

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Dan Perlman wrote:
- quote -

If the truck qualifies with more than 50% usage, then you
can use the section 179 deduction. So far, so good.

But be aware than once usage drops below 50%, and it will
should you pull the plug next year, then you will recapture
quite a bit of the deduction you took the previous year.
Can't have your eggs and cook em too. no wait. Can't have
your cake and eat it too.

Cheer$,
Harlan Lunsford, EA n LA

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"Dan Perlman" <dan[at]dpci.NOSPAM.us> wrote

- quote -

You would have to recapture the accelerated amount of
depreciation when the vehicle ceases to be business use (and
even when it drops to below 50% business use), so you would
owe tax under that scenario.

--
Paul A. Thomas, CPA
taxman at negia.net

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Dan Perlman wrote:

- quote -

A number of possible issues arise. One important one is
that you'd likely face a double whammy if you tried to get
the vehicle out of the corporation as you were
"disincorporating" and dissolving the entity. First, you
would need to recapture much of this depreciation, since if
the business use falls below 50% you have to recompute the
depreciation that would have been allowed under straight
line depreciation over the five year life--significantly
less than the 100% write off. That "extra" you have taken
would be taxable income to you. Second, now with the
depreciation restored, you would then record the disposition
of the vehicle upon transfer to the shareholder. That would
require you to compare the fair market value of the vehicle
with its now recomputed basis. If that results in a gain
(unlikely), then that gain is also taxed to you. If it
results in a loss, then you are *NOT* allowed to take the
loss. Third, that vehicle is considered part of what you
have received for your stock, and would impact the
computation of any gain on sale.

Not knowing your exact situation, it's tough to say exactly
how all of that would pan out, but it could be very nasty
<grin> . I would suggest you seek out competent paid
professional help to go through the likely scenarios and see
if you can then make an informed decision on the issue.

--
Ed Zollars, CPA
Phoenix, Arizona

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"Dan Perlman" <dan[at]dpci.NOSPAM.us> writes:
- quote -

Not likely!!! You would then have to recapture, and pay
tax, on the benefits derived in advance of whatever the
regular depreciation period would have been. This assumes
the vehicle no longer qualifies as a business vehicle.

"Jack" - John H. Fisher - TaxService[at]aol.com
Philadelphia, Pa - Atlantic City, NJ - West Wildwood, NJ
My Newsgroups & Boards at: http://members.aol.com/TaxService/index.html

Where Ignorance is bliss, 'tis folly to be wise!=

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"Dan Perlman" <dan[at]dpci.NOSPAM.us> wrote:

- quote -

So, what if there was a possibilty that I was closing the
business next year abd going to work for another company?

Wouldn't it be in my best interest to get all the deductions
I can, now?

Thanks,

Dan

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- quote -

Look at the vehicle weight sticker on the door of the truck.

Contact a tax pro and let them know the weight on the truck.
Carol

What can one expect of a day that begins with getting out of bed.
Semper Gumby (Always Flexible)

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"Dan Perlman" <dan[at]dpci.NOSPAM.us> wrote:

- quote -

First of all, can you justify the need for a heavy SUV or
truck for the use of your business. If you can, you may be
able to depreciate a good bit of the cost of the vehicle.
See a competent tax pro in your area and talk more about
this with him/her.

Wayne Brasch, CPA, M. S. Taxation

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"Dan Perlman" <dan[at]dpci.NOSPAM.us> wrote

- quote -

Remember that reporters usually don't explain things well in
the minute amount of time between commercials.

- quote -

It's not new, it's Code Section 179, which has been around
for many years.

Most any business asset purchased qualifies (desks,
computers, chairs, file cabinets, shelving, machinery, and
yes, any vehicle with a gross vehicle weight of 6000#).

- quote -

Take a look at the depreciation rules (Form 4562), paying
particular attention to Section 179 depreciation rules.

Remember though, that all you are doing is accelerating the
depreciation into this year, instead of taking the expense
over a longer number of years. It's more of a take it now,
and not later kind of thing. Which, if you can't read
between the lines, means that later, you're still making
payments, on a vehicle that for tax purposes is fully
expensed.....money out the door and no expense in those
years to show for it.

--
Paul A. Thomas, CPA
taxman at negia.net

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"Dan Perlman" <dan[at]dpci.NOSPAM.us> writes:

- quote -

If you use the vehicle 50%, or more, in your business, you
MAY be able to take what is called a "Section 179 deduction"
whereby you can deduct up to $200,000 in depreciation on
your current year tax return. In order to deduct the entire
amount, you would have to use the vehicle for biz 100% of
the time. As long as all of your business depreciation does
not exceed $200K and your net profits are sufficient to
offset the deduction your claim will likely be honored. You
could run into problems if you don't continue to use the car
for business purposes in the ensuing years. Another caveat -
when the gummint offers tax breaks, they are often offset by
exhorbitant higher prices charged by the dealers. A tax
break may reduce your current year's tax. That doesn't
necessarily mean you're getting something for nothing!!!=
Indeed, even though the incentive exists, if you don't have
sufficient profits (income from employment) to support the
claim, it will be of no value in the current year.

"Jack" - John H. Fisher - TaxService[at]aol.com
Philadelphia, Pa - Atlantic City, NJ - West Wildwood, NJ
My Newsgroups & Boards at: http://members.aol.com/TaxService/index.html

Where Ignorance is bliss, 'tis folly to be wise!=

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I saw a story on MSNBC the other day.
They talked about some new 2003 tax act where if a small
business buys a heavy SUV or Truck, the entire purchase
price can be deducted from this years taxes.

I run a consulting business from my home and my company is
an S-Corp.

How can I find out if this applies to me?

Thanks,

Dan

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